Little did Frederic Reiss know when he established the first captive insurance company in Bermuda 60 +years ago that this type of commercial coverage would sweep the market with such force and success. Perhaps Reiss (an engineer turned broker) had some inkling. But no one could predict the popularity. Today, more than 90% of Fortune 500 companies are part of captives. Moreover, in the past few years, the number of small companies using this program has increased by 25%, according to most expert reports, which have identified about 6,800 U.S. companies under this umbrella.
So with the big business market saturated, more and more mid-sized and small businesses are turning their sights on group captive insurance. In the U.S., industry leader eMaxx is pioneering the way to more lucrative opportunities for their clientele. What is a captive insurance definition? The National Association of Insurance Commissioners does a good job of explaining: “In its simplest form, a captive is a wholly owned subsidiary created to provide insurance to its non-insurance parent company.” Why in this a smart option? In short, it increases control and reduces costs.
The advantages are extraordinary. One of the first is that this type of partnership negates the limitation of traditional policies. Another excellent perk is that companies can avoid unpredictable market swings, premium increases and excessive brokerage fees. From a management standpoint, a captive puts control in the hands of the insured; this includes the entire claims process. It’s also a wise investment. For example, premiums can be pooled, invested and distributed to owners if not used for claims. Another advantage is that partners gain access to the reinsurance market, which spreads risk among multiple companies to reduce loss in case of disaster. This lower cost market is expected to grow substantially in the next several years.
A captive in insurance also means that small and mid-sized companies whose specialties may have put them on the fringe of traditional coverage can now have access to tailored programs that work with them—confronting and mitigating risks before they happen, not cleaning up afterwards. This is a huge perk among many niche industries, such as energy, recycling, construction, crane & rigging, utilities, waste management, transportation and towing—where safety and loss prevention are paramount.
Join the smart businesses across the nation that have assumed control and managed risk proactively by underwriting their own policies instead of paying astronomical premiums to third parties. Contact eMaxx today to learn more about how to get started.